"My FICO Score is Too Low for a Mortgage? Can I Use a Co-Signer?"

By
Mortgage and Lending with WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 NMLS 244226

"My FICO Score is Too Low for a Mortgage? Can I Use a Co-Signer?"

roseville mortgageSometimes I will run credit on a Roseville mortgage applicant, their FICO score is too low for them to qualify for a mortgage.  When I deliver the bad news, the borrower will often ask if they could qualify by adding a co-signer.  

Adding a Co-Borrower (someone like a spouse or partner who will be living in the home after it is purchased) or a Non-Occupant Co-Borrower (someone who will not be living in the home but agrees to be on the loan with the Borrower) is certainly an option on many types of mortgages. But here is the problem: when evaluating credit score, the underwriting decision is based on the borrower with the lowest FICO score.  So, if your FICO score is 550 and you add a Non-Occupant Co-Borrower whose score is 800, the loan would be denied because of your 550.   

So what can you do?  Work with a reputable credit remediation specialist to get your FICO score up to acceptable levels.  I have great testimonials about fellow Rainer, Larry Dague, of Credit Score Solutions!  And his rates are very reasonable!

Related Posts:

The Myth of Separate Credit on Government Loans

Ten Credit Do's and Dont's to Bear in Mind Prior to Getting Your Sacramento Mortgage

First Time Home Buyer Credit Checklist

Is There a Rule of Thumb Regarding the Number of Credit Lines to Have Open?

Comments (2)

John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Its sad, but what are you going to do. The bottom line is that the individual needs to improve their credit overall. If the home is that important (and to most it IS) then they will focus their effort on credit clean up. You are so right about using the RIGHT Credit Counselor because there are few bad ones out there. A consumer needs to be able to trust that the job is being done right and that the company is reputable before paying any fees.

Jan 06, 2011 03:42 PM
Ed Gillespie
WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 - Folsom, CA

Very true, John.  Those in our industry need to do their best to help homebuyers be successful for the long-term and the work of credit repair is a good way to do start. 

Not only are some of the credit remediation services bad, some also charge exorbitant fees.

Jan 06, 2011 04:24 PM